Tax Information You Should Know

• 2014 Inflation-Adjusted Amounts: The IRS released its list of inflation-adjusted tax amounts for 2014, including the tax rate tables for estates, trusts, and different filing statuses; basic and additional standard deduction amounts; personal exemption amount; AMT exemption; kiddie tax figures, unified estate and gift tax exclusion amount; and the gift tax annual exclusion. 2014 Inflation-Adjusted Amounts.
• 2014 Pension Plan Amounts: The IRS published cost-of-living adjustments to various pension plans and related amounts for 2014. For instance, the (1) benefit limit for defined benefit plans increases from $205,000 to $210,000; (2) defined contribution plan limit goes from $51,000 to $52,000; (3) compensation limit for determining benefits and contributions increases from $255,000 to $260,000; (4) definition of a highly compensated employee is unchanged at $115,000; (5) elective deferral limit for employees who participate in 401(k), 403(b), and most 457 plans remains unchanged at $17,500; and (6) limit on contributions to SIMPLE accounts also remains unchanged at $12,000.
• Energy Property Tax Credits: A new notice provides guidance in Question and Answer (Q&A) format on the Section 25C credit for nonbusiness energy property and the Section 25D credit for residential energy efficient property. The Q&As clarify that both credits are nonrefundable personal tax credits that can be used to offset the AMT; however, only the Section 25D credit can be carried forward. The credits can be claimed when installation of the property is completed, which must be by the end of 2013 for the Section 25C credit and by the end of 2016 for the Section 25D credit.
• Health Flexible Spending Accounts: Health Flexible Spending Accounts (FSA) contributions left over at the end of a plan year are forfeited to the employer ("use-it-or-lose-it"), although plans can extend the period for incurring expenses for qualified benefits to the 15th day of the third month after the end of the plan year (i.e., March 15th for a calendar-year plan). Now, for the first time, employers can amend their Section 125 cafeteria plan to allow up to $500 of unused amounts remaining at the end of a plan year to be paid or reimbursed to plan participants for qualified medical expenses incurred during the following plan year, provided the plan does not also have the grace period rule.

Henderson Hutcherson & McCullough, PLLC, will continue to keep you updated. Also, visit www.irs.govfor more information as it becomes available.

Please contact George Wilmoth or any of your trusted tax advisors at Henderson Hutcherson & McCullough, PLLC today if you have questions regarding this information.